SEC Report Reveals Dozens Of ICOs Under Investigation

The SEC has increased its crackdown on the sector with the goal of protecting investors. A number of projects are now under investigation.

The SEC Increases Oversight On ICOs

On Friday the Securities Exchange Commission released a yearly report on enforcement. The report was prepared and released by the SEC’s Enforcement Division. The report contained details on criminal actions taken by ICOs that turned out to be frauds.

The report detailed operations of the cyber unit that was formed towards the end of 2017. The unit was mandated with monitoring online related violations of existing regulations, especially in the growing ICO sector. With the massive growth in ICOs, the SEC has branded the sector as a high-risk investment.

According to the report, the SEC opened numerous investigations linked to ICOs and other digital products. A number of investigations are still ongoing.

The report listed some of the fraudulent ICOs with just three of them extorting more than $86 million from investors. Among them is an ICO by Titanium Blockchain which raised $32 million. On the other hand, one law violator managed to get $15 million by assuring investors that they will get returns of 13 fold. Another ICO raised $21 million but later failed, leaving investors with nothing.

The report indicated that the SEC had formed a number of other divisions to effectively monitor the sector. One of the divisions is the Retail Strategy Task Force. The wing was established to guide the establishment and referral initiatives pertaining to trade suspensions linked to crypto and DLT sectors.

The US regulator also looked at penalties issued to violators of various regulations. The SEC said that in 2018 firms were ordered to part with $3.94 billion in penalties for various abuses. Additionally, $3.04 billion of the fines was imposed on the top 5 percent of the top parties.

SEC Keenly Following ICOs

Last month, Yahoo and Decrypt jointly conducted a survey and unveiled a report that alleged that the SEC had widened its oversight on ICOs. The crackdown meant that many ICOs were susceptible to being cancelled. The two companies, however, noted that at the moment, the ICO space has no clear regulatory framework for the establishment of products.

The Yahoo Finance report added that pressure from the SEC compelled some projects to secretly refund investors and meet penalties required as opposed to exploring other legal requirements.